The winners and losers from tax and spend

Yesterday the ABS released the latest of its surveys of the winner and losers of Australia’s taxing and spending, covering the 2003-04 period.

And the winners are…unemployed single parents with children under 5, taking in on average $878 more a week in income transfers and welfare services than they pay in tax, most of which is indirect tax (it has a statistical caution on the number, but despite low overall tax this group scores the highest payment on ‘tobacco products’, consistent with previous research showing the poor pay a disproportionate share of ‘sin’ taxes).

And the losers are…the top 20% of households by income, who pay on average $571 a week more in tax than they receive back in benefits and services.

As with previous surveys, this one finds that the bottom 60% of households are net beneficiaries of the tax and welfare system, ie they receive more in income transfers and welfare services than they pay in tax. The Australian gave this aspect its lead story, with the heading ‘Tax take helping Howard battlers’. The poorest 20% get more than 40% of all social assistance, and the richest 20% only 9%.

But the redistributive aspect of policy is driven by income transfers rather than government services. Continue reading “The winners and losers from tax and spend”